THE STROMBERG REPORT, by Kimberly Gail Price

Another part of the LICH Saga, sidebar to our recent story. 

In October 2010, Cliff Stromberg was commissioned by Chancellor, Nancy Zimpher to evaluate the Research Foundation of four Health Science Centers in the SUNY system. Cliff Stromberg works for a legal firm in D.C. called Hogan Lovells. His bio on their website says “For several years, he held an appointment as adjunct associate professor at The George Washington University Medical School.”

Hogan Lovells is a law firm that represents health and medical facilities. SUNY signed a $10 million contract with them in 2009 for legal health services. Hogan Lovells helped with the handoff between Continuum and SUNY in 2011.

In late 2010, Chancellor Zimpher commissioned Cliff Stromberg from Hogan Lovells to investigate the research funds of the entire SUNY system. He worked on the report from October 2010 until February 2011, before turning it over to Zimpher.

The Stromberg Report was released to Zimpher and the Board of Trustees in May 2011. On June 3, 2011, The Times Union published an article called “SUNY top leader out after scathing report,” announcing that Vice Chancellor John O’Connor was resigning because “[the] report criticized his autocratic and uncommunicative leadership” with SUNY and the Research Foundation (RF). He had worked with SUNY for 15 years.

Meanwhile, Williams who had been on sabbatical from GWU for the entirety of 2011, took a job with Verras Healthcare International in May 2012, just before LaRosa’s resignation. If Williams and Stromberg were well-acquainted from GWU, it makes perfect sense that Williams would know the results of the evaluation before May, and set himself up to be in the proper place when the other shoe fell.
On June 12, 2012, La Rosa, who was interviewed for the “scathing report” also resigned after 13 years.

Stromberg wrote the report that ultimately led to the immediate resignation of O’Connor, and eventually the resignation of LaRosa. During the time between the two resignations, Governor Cuomo also appointed McCall as the Chair of the Board of Trustees.
McCall had previously been on the board and Carl Hayden was the chair. Hayden resigned from the board before his term expired because he didn’t want to be on the board after basically being demoted by Cuomo. The stage was set for Williams to come in and argue the acquisition had been a mistake, and LICH needed to be sold off to preserve the medical center.

At the Legislative session to discuss the Sustainability plan earlier this year, McCall and Zimpher both denied being involved with SUNY during the takeover. However, Zimpher was appointed chancellor in early 2009, and although McCall was not yet the Chair, he was already serving as a trustee.

By replacing all of the heads of Downstate relevant to LICH, SUNY seems intent on reversing the commitment they made to keep LICH as a full-service hospital because the decision to acquire LICH was made by people no longer with the university. But with all of the pieces in place, it appears that destroying LICH was part of the plan from the initial acquisition.

At the November 14, 2012 Academic Medical Centers and Hospital Committee Board of Trustees meeting, Stromberg advised the board on a number of solutions. According to the meeting’s minutes, Stromberg advised, “If you want to sell assets, than you should hire an investment banker. Otherwise, to save Downstate you hire a consultant like David Pitts.” Enter Pitts Management.

Pitts Management entered into LICH in early 2013 under the guise of moving LICH into a sustainable operation after SUNY dropped their formal closure plan with the Department of Health.

However, as Downstate continued to take measures to close the hospital, Pitts Management enacted their orders by refusing to admit patients, diverting all ambulance services and maintaining dozens of armed guards throughout and surrounding the LICH campus.

Stromberg also said SUNY should start thinking about which assets they could sell to get out of their financial hole; Zimpher said they had already assessed their assets. LICH was not specifically mentioned. However, SUNY Downstate had already appraised the real estate assets of LICH’s 18 remaining buildings. “These options were presented to the leadership of the academic medical centers and that some of the narrowing of options had occurred,” the chancellor said.

Hogan Lovells stayed mostly in the background of the closure plans until Judge Demarest reversed her ruling of 2011 to united LICH with SUNY Downstate. Because they were involved in the original merger, Hogan was pulled into the court proceedings, and has now joined SUNY’s legal team.

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3 Responses to THE STROMBERG REPORT, by Kimberly Gail Price

  1. James Vogel says:

    Thank you for this, guys! Great reporting. Now, what can we do with this, hmmmmmmm?

  2. Bklyn Hts resident says:

    As always, your comprehensive reporting in this and the related articles sheds important light on the “behind the scenes” of SUNY-Downstate’s willful and reckless dismemberment of a highly regarded, much needed hospital The following is some further information about the involvement of the law firm Hogan Lovells, which, as you pointed out, currently represents SUNY-Downstate in Judge Demarest’s court and SUNY’s appeals of her orders.

    1)According to the NYS Comptroller’s website, SUNY’s five-year contract with Hogan Lovells (June 1, 2009 – May 31, 2014) is for almost $26 million. Of that, $10 million is attributed to SUNY-Downstate, with almost $7 million spent to date.

    2)The Stromberg Report led to the Comptroller’s office sanctioning SUNY for inappropriately paying $270,000 under its existing $26 million legal services contract with Hogan Lovells when, according to the Comptroller, it was not for legal services and should have been advertised and open to competitive bidding. See http://www.osc.state.ny.us/press/releases/jul11/Grannis_Zimpher070511.pdf

    3)In June 2012, Hogan Lovells represented SUNY-Downstate in requesting Judge Demarest’s approval for SUNY to obtain $15 million of LICH money held by Continuum. In that connection, Hogan Lovells sent a letter to Judge Demarest, referring to the $75 million loan that SUNY now claims (in the Wall Street Journal) is a LICH liability. At the time, Hogan Lovells wrote that the loan (initially a line of credit) was made in response to the “financial emergency currently facing SUNY-Downstate” (not LICH). There was no mention whatsoever of a financial emergency at LICH, either in the letter or in SUNY’s Petition to Judge Demarest..

    4) Hogan Lovells had a major role in SUNY-Downstate’s 2011 no-cash acquisition of LICH, which Judge Demarest only approved on condition of SUNY-Downstate’s continuing LICH’s charitable mission as a full-service hospital and commitment (contained in the Asset Purchase Agreement signed by SUNY and Continuum) to repay $140 million borrowed from LICH’s Othmer Endowment Funds. Reporting on the LICH acquisition, the SUNY Office of General Counsel’s 2011-12 Report specifically cites Hogan Lovells’ involvement in the completion of the “seemingly infinite number of required steps and agreements necessary for the deal to close.”

  3. Henry James says:

    Cuomo is like a great magician. He keeps you watching Dr Williams or the SUNY Board all the while he was setting up the sale this Sunday of LICH to Citi Group. They will walk into the Contempt hearing telling the judge they no longer own LICH. Judge can get as mad as she wants but it will be over. Citi has already started carving up the sales to others.

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